Globalization
Learning Outcomes
- Define globalization and describe its manifestation in modern society
- Discuss the pros and cons of globalization
What Is Globalization?
Globalization refers to the process of integrating governments, cultures, and financial markets through international trade into a single world market. You’ve already learned about globalization as it applies to culture and technology, as well as stratification and inequality. In this context, you’ll examine its application as it connects to a global economy.
Often the process of globalization begins with a single motive, such as market expansion (on the part of a corporation) or increased access to healthcare (on the part of a nonprofit organization). But usually there is a snowball effect, and globalization becomes a mixed bag of economic, philanthropic, entrepreneurial, and cultural efforts. Sometimes the efforts have obvious benefits, even for those who worry about cultural colonialism, such as campaigns to bring clean-water technology to rural areas that do not have access to safe drinking water.
Other globalization efforts, however, are more complex. Let us look, for example, at the North American Free Trade Agreement (NAFTA). The agreement is among the countries of North America, including Canada, the United States, and Mexico and allows much freer trade opportunities without the kind of tariffs (taxes) and import laws that restrict international trade. Often, trade opportunities are misrepresented by politicians and economists, who may offer them up as a panacea for economic woes. For example, trade can lead to both increases and decreases in job opportunities. This is because while more lax export laws mean there is the potential for job growth in the United States, more imports can mean the exact opposite. As the United States imports more goods from outside the country, jobs here typically decrease, as more and more products are made overseas.
Many prominent economists believed that when NAFTA was created in 1994 it would lead to major gains in jobs. But by 2010, the evidence showed an opposite impact, including 682,900 U.S. jobs lost across all states (Parks 2011). While NAFTA did increase the flow of goods and capital across the northern and southern U.S. borders, it also increased unemployment in Mexico, which spurred greater amounts of illegal immigration motivated by a search for work. Most economic analyses indicate that NAFTA has been beneficial to the North American economies and the average citizen, but harmed a small minority of workers in industries with the greatest exposure to trade competition. Economists hold that withdrawing from NAFTA or renegotiating NAFTA in a way that reestablishes trade barriers will adversely affect the U.S. economy and cost jobs. However, Mexico would be much more severely affected by job loss and reduction of economic growth in both the short term and long term. This remains a controversial topic, especially since the election of Donald Trump and a heightened concern about border crossings into the United States. On September 30, 2018, it was announced that the United States, Mexico, and Canada had come to an agreement to replace NAFTA with the United States–Mexico–Canada Agreement (USMCA). The USMCA is the result of the renegotiation of NAFTA that the member states undertook from 2017 to 2018, and though it was signed by each nation’s leader, as of May 2019, it was not yet ratified.
There are several forces driving globalization, including the global economy and multinational corporations that control assets, sales, production, and employment (United Nations 1973). Characteristics of multinational corporations include the following: A large share of their capital is collected from a variety of nations, their business is conducted without regard to national borders, they concentrate wealth in the hands of core nations and already wealthy individuals, and they play a key role in the global economy.
Another impact of globalization is the emergence of global assembly lines, where products are assembled over the course of several international transactions. For instance, Apple designs its next-generation Mac prototype in the United States, components are made in various peripheral nations, they are then shipped to another peripheral nation such as Malaysia for assembly, and tech support is outsourced to India.
Globalization has also led to the development of global commodity chains, where internationally integrated economic links connect workers and corporations for the purpose of manufacture and marketing (Plahe 2005). For example, in maquiladoras, mostly found in northern Mexico, workers may sew imported precut pieces of fabric into garments. Furthermore, globalization also brings an international division of labor, in which comparatively wealthy workers from core nations compete with the low-wage labor pool of peripheral and semi-peripheral nations. This can lead to a sense of xenophobia, which is an intense fear and even hatred of foreigners and foreign goods. Corporations trying to maximize their profits in the United States are conscious of this risk and attempt to “Americanize” their products, selling shirts printed with U.S. flags that were nevertheless made in Mexico or elsewhere.
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Aspects of Globalization
Globalized trade is nothing new. Societies in ancient Greece and Rome traded with other societies in Africa, the Middle East, India, and China. Trade expanded further during the Islamic Golden Age and after the rise of the Mongol Empire. The establishment of colonial empires after the voyages of discovery by European countries meant that trade was going on all over the world. In the nineteenth century, the Industrial Revolution led to even more trade of ever-increasing amounts of goods. However, the advance of technology, especially communications, after World War II and the Cold War, triggered the explosive expansion of global markets that we see today.
Further Research
The World Social Forum (WSF) was created in response to the creation of the World Economic Forum (WEF). The WSF is a coalition of organizations dedicated to the idea of a worldwide civil society and presents itself as an alternative to WEF, which it says is too focused on capitalism.
One way to look at the similarities and differences that exist among the economies of different nations is to compare their standards of living. The statistic most commonly used to do this is the domestic product per capita. This is the gross domestic product, or GDP, of a country divided by its population. The table below compares the top 11 countries with the bottom 11 out of the 228 countries listed in the CIA World Factbook.
| Gross Domestic Product Per Capita | ||
|---|---|---|
| Rank | Country |
GDP – per capita (PPP) |
| 1 | Qatar | $102,100 |
| 2 | Liechtenstein | $89,400 |
| 3 | Macau | $88,700 |
| 4 | Bermuda | $86,000 |
| 5 | Monaco | $85,500 |
| 6 | Luxembourg | $77,900 |
| 7 | Singapore | $62,400 |
| 8 | Jersey | $57,000 |
| 9 | Norway | $55,400 |
| 10 | Falkland Islands (Islas Malvinas) | $55,400 |
| 11 | Switzerland | $54,800 |
| 218 | Guinea | $1,100 |
| 219 | Tokelau | $1,000 |
| 220 | Madagascar | $1,000 |
| 221 | Malawi | $900 |
| 222 | Niger | $800 |
| 223 | Liberia | $700 |
| 224 | Central African Republic | $700 |
| 225 | Burundi | $600 |
| 226 | Somalia | $600 |
| 227 | Zimbabwe | $600 |
| 228 | Congo, Democratic Republic of the | $400 |
There are benefits and drawbacks to globalization. Some of the benefits include the exponentially accelerated progress of development, the creation of international awareness and empowerment, and the potential for increased wealth (Abedian 2002). However, experience has shown that countries can also be weakened by globalization. Some critics of globalization worry about the growing influence of enormous international financial and industrial corporations that benefit the most from free trade and unrestricted markets. They fear these corporations can use their vast wealth and resources to control governments to act in their interest rather than that of the local population (Bakan 2004). Indeed, when looking at the countries at the bottom of the list above, we are looking at places where the primary benefactors of mineral exploitation are major corporations and a few key political figures.
The Dark Side of Globalization
Globalization isn’t always a beneficial thing. This article by Andreas Exenberger and Simon Hartmann on the dark side of globalization details some of the devastating consequences of globalization in the Congo.
You can also watch this CrashCourse History video about globalization to better understand its pros and cons: Globalization II – Good or Bad?
Other critics oppose globalization for what they see as negative impacts on the environment and local economies. Rapid industrialization, often a key component of globalization, can lead to widespread economic damage due to the lack of regulatory guidelines (Speth 2003). Further, as there are often no social institutions in place to protect workers in countries where jobs are scarce, some critics state that globalization leads to weak labor movements (Boswell and Stevis 1997). Finally, critics are concerned that wealthy countries can force economically weaker nations to open their markets while protecting their own local products from competition (Wallerstein 1974). This can be particularly true of agricultural products, which are often one of the main exports of poor and developing countries (Koroma 2007). In a 2007 article for the United Nations, Koroma discusses the difficulties faced by “least developed countries” (LDCs) that seek to participate in globalization efforts. These countries typically lack the infrastructure to be flexible and nimble in their production and trade, and therefore are vulnerable to everything from unfavorable weather conditions to international price volatility. In short, rather than offering them more opportunities, the increased competition and fast pace of a globalized market can make it more challenging than ever for LDCs to move forward (Koroma 2007).
The increasing use of outsourcing of manufacturing and service-industry jobs to developing countries has caused increased unemployment in some developed countries. Countries that do not develop new jobs to replace those that move, and train their labor force to do them, will find support for globalization weakening.
Watch It
This video illustrates some of the sociological advantages and disadvantages of globalization.
Think It Over
- What impact has globalization had on the music you listen to, the books you read, or the movies or television you watch?
- What effect can immigration have on the economy of a developing country?
- Is globalization a danger to local cultures? Why, or why not?
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Glossary
- global assembly lines:
- a practice where products are assembled over the course of several international transactions
- global commodity chains:
- internationally integrated economic links that connect workers and corporations for the purpose of manufacture and marketing
- xenophobia:
- an intense fear and even hatred of foreigners and foreign goods
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